Fertilizer Imports Surges 66 pc This Fiscal

Chennai: The import of fertilizers has shot up 66 per cent in the first 10 months of the financial year. Going forward, the dependence on imports is expected to rise. Fertilizers being subject to geo-political tensions, this dependence can affect the productivity in farming.

Between April and January this fiscal, the country imported $14.9 billion valued fertilizers against $9 billion in the same period last year – a growth of 65.8 per cent.

In the fertilizer basket, urea is the largest component. Of the urea consumption in India, imports account for 25 per cent and ICRA expects this to go up to 30 per cent by FY30. In the case of Diammonium phosphate (DAP), the imports account for 56 per cent. For NPK it is 27 per cent and Muriate Of Potash (MOP) it is 100 per cent.

As China and West Asian countries supply urea, the imports remain exposed to geopolitical risks. Globally, urea prices have been highly volatile in recent periods, and with only limited capacity additions expected over the next five years. This volatility is likely to persist. The export of urea out of China remains under tight control of the government, which adds to the uncertainty.

Domestic production of urea had witnessed a 7.62 MMT increase from FY2019 to FY2025 with several new plants coming up. However, recently with closure of two plants, domestic production capacity has been limited at 30.6 MMTPA, indicating significant shortfall against urea demand of 38 MMT as in FY2025.

Several industry incumbents have shown their intent to set up urea plants and are awaiting approvals from the government. Since the execution of these projects will take 3.5-4 years, clarity on continuation of NIP- 2012 is essential to ensure import dependence remains in check over the medium term.

The capital outlay for a 1.27-MMTPA urea project is $1.2 billion for a greenfield project and $1 billion for a brownfield project. The project economics remain healthy under NIP-2012.